William
Thompson

|Partner

Managing Partner of the firm's Brisbane office, Bill is MinterEllison's Regional Markets Leader, responsible for the management and strategy of the firm's regional offices.

He is recognised nationally and internationally as one of Australia's leading corporate tax advisors and tax disputes lawyers and heads the firm's Tax Division. In his broad tax practice, Bill works with publicly listed and unlisted corporations, industry associations, government departments and government owned corporations, large not for profit organisations including universities and scientific research organisations, and large industry and retail superannuation funds, as well as high-wealth private clients.

He primarily advises on the tax implications of business and corporate acquisitions, corporate structures and restructures, and financing arrangements and regularly advises on corporate taxation, international tax relating to inbound investments, capital gains tax, goods and services tax (GST), stamp duty, customs duty, land tax, and employment taxes.

Bill is experienced in negotiating major disputes with Federal and State revenue authorities and handling audits by them. He has acted in many taxation disputes, including litigation to appellate level in a number of landmark tax cases.

In addition, Bill leads our Private Client Wealth practice. His clients have included some of Australia's wealthiest families.

Bill is a frequent speaker and author on taxation issues and has presented papers at conferences of the International Bar Association Taxation Committee, the American Bar Association Taxation Committee (foreign lawyers subcommittee), and the Taxation Academy of Singapore.

The Australian Government enacted a Multinational Anti-Avoidance Law in December 2015, and the recent Federal Budget on 3 May 2016 proposed that a Diverted Profits Tax also be enacted. Both provisions impact upon large multinationals and their potential impact should be risk assessed by Boards.

On 3 May 2016, the Treasurer Scott Morrison delivered the 2016/17 Federal Budget. On 3 May 2016, the Treasurer Scott Morrison delivered the 2016/17 Federal Budget. The tax announcements in the Budget reflect a continuation of the major themes on taxation from the 2015/16 Budget, focussing on small business as a way to grow the economy, and on multinational tax avoidance.

The new 10% foreign resident capital gains tax withholding regime applies more broadly than many will expect, and both vendors and purchasers, whether Australian resident or not, will need to consider whether or not their transactions are affected.

Today, the Treasurer announced the implementation of a 'standard' set of tax-related conditions that will apply to foreign investment clearances. This announcement is significant from a foreign direct investment perspective as it likely requires additional or more detailed upfront tax structuring advice prior to submission of a FIRB application, as well as a higher level of engagement with the ATO on FIRB applications.

Late last year, the High Court handed down its decision in Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) [2015] HCA 48. The ATO has recently issued a Decision Impact Statement (DIS) setting out its view of the consequences of the High Court's decision.

On 13 November 2015 the Treasurer and Minister of Finance jointly announced that a new double tax treaty had been negotiated with Germany, replacing the 1972 agreement. The text of the new treaty evidences Australia's Treaty policy response to recommendations made by the OECD as part of the base erosion and profit shifting (BEPS) project. In this Alert we summarise the BEPS treaty proposals made by the OECD, and draw attention to Australia's response as evidenced in the new Australia/Germany Double Tax Treaty.

The High Court's decision in Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) held that, in the absence of an assessment, a liquidator is not required to retain funds from asset sale proceeds in order to meet a tax liability which could become payable as a result of a capital gain made on the sale. In doing so, the majority of the High Court affirmed the decision of the Full Federal Court and provided long awaited guidance to liquidators, receivers and administrators.

On 5 October 2015 the OECD issued its final paper on BEPS Action 12 Mandatory Disclosure Rules, Action 12 - 2015 Final Report (Paper). In this Alert we highlight the main issues and recommendations for taxation reform raised in the Paper.

The Australian Treasurer's BEPS Press Release on 6 October 2015 noted that the ATO is considering the costs and benefits for Australia of the mandatory disclosure rules recommended in the Paper. This is an area that may well result in reform in Australia potentially leading to further tax reporting for Australian taxpayers. For risk governance purposes, Boards should keep aware of the ATO's recommendations in relation to this Paper.

Action 4 addressed the use of excessive interest deductions on debt to related and third parties. The OECD recommended a new best practice rule to prevent base erosion and profit shifting. The recommended approach would cap interest deductions based on a fixed ratio to EBITDA. Relief would be provided to highly geared groups through a worldwide gearing test.

This is a marked difference to Australia's recently amended thin capitalisation rules, which operate based on a fixed debt/equity ratio. Any amendments to the thin capitalisation rules or interest deductibility rules will impact funding arrangements, as well as highly leveraged groups, including banking and finance providers and infrastructure entities.

This Alert focuses on Action 2 – Hybrid Mismatches, dealing with the OECD's proposals to neutralize tax benefits associated with instruments and entities which result in tax deductions in one jurisdiction and tax exemptions in another. The OECD's recommendations will lead to international action as well as domestic tax law changes, with Australia demonstrating its willingness to move early in implementing changes. For effective tax risk governance, it is important for multinational Boards to be aware of and to proactively respond to the OECD's recommendations.

On 5 October 2015, the OECD issued its final papers for each action item in the Base Erosion and Profit Shifting (BEPS) project. The OECD's recommendations will lead to international action as well as domestic tax law changes. For effective tax risk governance, it is important for multinational Boards to be aware of and to proactively respond to the OECD's recommendations.

New tax avoidance and transparency laws have been introduced, and are proposed to be effective from 1 January 2016. These new will laws impact upon multinational groups, requiring multinationals to consider their tax risk profile and their risk governance policies.

The immediate deduction for the cost of acquiring mining rights and mining information first used for exploration was removed for M&A acquisitions after 14 May 2013 by the Tax and Superannuation Laws Amendment (2014 Measures No.3) Act 2014 (2014 amendments). The 2014 amendments limited the availability of immediate deductions to those taxpayers carrying out mining exploration themselves, and otherwise provided that the costs of acquiring these rights would be depreciable over the shorter of its effective life or 15 years, assuming the 'first use' test was met. This had the anomalous and unintended effect of producing taxation consequences for farm-in farm-out (farm-out arrangements) and interest realignment arrangements which were previously tax neutral. On 16 September 2015, the Government effectively reinstated the tax neutral status of these arrangements with the enactment of the Tax and Superannuation Laws Amendment (2015 Measures No. 2) Act 2015 (No. 130 of 2015) ('the new law').

The interim report on corporate tax avoidance, released on 17 August 2015, made 17 recommendations in relation to evidence of tax avoidance, multilateral efforts to combat avoidance, the potential for unilateral action by Australia and the capacity of Australian Government agencies to collect corporate tax. The final report, which is due on 30 November 2015 will focus on transfer pricing with a secondary focus on excessive debt loading, P.E.s, exemptions from general purpose accounting requirements and the role of private accounting firms in tax avoidance.

The OECD has released a revised discussion draft of BEPS Action 7: Preventing the Artificial Avoidance of permanent establishment Status (Paper), which addresses Action 7 of the OECD's Base Erosion and Profit Shifting (BEPS) Action Plan. In this Alert we highlight the major changes proposed in the Paper, and provide our comment on the potential impact of those changes.

We consider the key tax issues affecting business announced in the Budget, including further details on major announcements including multinational anti-avoidance provisions and GST on digital products and services.

Yesterday, Treasury finally released long awaited Exposure Draft legislation to specifically address the taxation treatment of earnout arrangements. While in draft and still subject to consultation (open until 21 May 2015), we now have a clear idea on how a commonly adopted transaction structure will be taxed.

The High Court has granted special leave to appeal the decision in Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) [2014] FCAFC 133 which held that a liquidator is not required to retain funds from the proceeds of sale of an asset to pay tax before an assessment is issued.

MinterEllison's popular Guide to the fundamentals of doing business in Australia outlines Australia's business rules, from foreign investment guidelines to taxation, consumer protection, intellectual property and the employment law system. It is essential reading for anyone considering investing in Australia or starting up a business in this country.

On 16 September 2014 the OECD issued its paper on BEPS Action 15: Developing a Multilateral Instrument to Modify Bilateral Tax Treaties. This Alert outlines the OECD's proposal to develop a multilateral treaty as part of the OECD's response to BEPS issues.

On 16 September 2014, the OECD issued its Hybrid Recommendations to ensure the coherence of corporate income taxation at the international level in a document entitled, 'Neutralising the Effects of Hybrid Mismatch Arrangements' (Hybrid Recommendations). The Hybrid Recommendations deal with Action 2 of the OECD's wider, 15 point, Base Erosion and Profit Shifting Action Plan.

On 16 September 2014 the OECD issued its paper on BEPS Action 6: Preventing the Granting of Treaty Benefits in Inappropriate Circumstances. This Alert summarises the main BEPS issues identified by the OECD and the way forward for taxation reform identified in the OECD paper.

On 16 September 2014 the OECD released an interim report on countering harmful tax practices in connection with Action 5 of its Action Plan on Base Erosion and Profit Shifting. This Alert summarises the key issues highlighted in the OECD's report.

On 16 September 2014 the OECD issued its paper on BEPS Action 1: Addressing the Tax Challenges of the Digital Economy. This Alert summarises the main BEPS issues identified by the OECD and the way forward for taxation reform identified in the OECD paper.

The Australian financial services industry is undergoing significant reform aimed at improving the trust and confidence of Australian retail investors in the financial planning sector. The reforms are the Australian Government's response to the Parliamentary Joint Committee on Corporations and Financial Services' Inquiry into financial products and services in Australia.

The Full Federal Court decision in Hunger Project Australia has confirmed that an entity can be a 'public benevolent institution' without directly providing relief from poverty, sickness, disability, destitution, helplessness or other distress.

On 28 April 2014, Australia entered into an Intergovernmental Agreement with the United States of America to improve international tax compliance and implement the US Foreign Account Tax Compliance Act. Exposure draft legislation has also been released by the Australian Treasury which will give domestic effect to our obligations under the IGA.

In addition to the 191 Minter Ellison lawyers named in 2014 Best Lawyers Australia list, 23 of our partners have been singled out for an additional accolade – awarded the title of "Lawyer of the Year".

On 24 March 2014 the OECD issued a Discussion Draft on BEPS Action 1: Address the Tax Challenges of the Digital Economy as part of the OECD's 15 point Base Erosion and Profit Shifting (BEPS) Action Plan. Responses were due by 14 April 2014. In this Alert we consider the main issues and options for taxation reform raised in the Discussion Draft.

To assist you in managing the tax risks of your organisation, we have created a quarterly update to discuss the issues that you may wish to raise with your Board during each reporting period, starting with Q3.

On 3 April 2014, the Full Federal Court issued its judgment in Commissioner of Taxation v Resource Capital Fund III LP overturning the Federal Court's judgment. This case is significant because the main issue it considers relates to the treatment of a partnership that is tax transparent in one jurisdiction and taxable in another, and the application of a double tax treaty.

The Tax Agent Services Act 2009 (TASA) has been amended, heralding significant changes to the way financial planners are regulated. Financial planners will need to understand the boundaries between providing purely financial product advice and a tax (financial) advice service, and to determine whether they need to register with the Tax Practitioners Board (TPB) as Registered (Tax) Financial Advisers from 1 July 2014.

The government has released a consultation paper on a proposed Exploration Development Incentive allowing junior exploration companies to renounce their exploration losses and 'distribute' this 'benefit' to their members in the form of a refundable tax offset - an Exploration Credit. The Incentive is intended to apply to expenditure made after 1 July 2014.

The federal government has released exposure draft legislation which restates the 'in Australia' special condition. This special condition must be met by entities accessing tax concessions such as income tax exemption and by entities which have deductible gift recipient status.

A further tranche of tax legislation to exempt 'IMR foreign funds' from Australian income tax has been released for public comment. Once enacted, this legislation will introduce an exemption from Australian tax for 'widely held' foreign funds and their investors. The IMR regime provides greater certainty to IMR foreign funds and investors around their Australian tax position. However, the key to accessing this certainty is in understanding and confirming that the IMR foreign fund is indeed eligible.

The Minister for Social Services, Kevin Andrews, confirmed that the federal government will move to abolish the Australian Charities and Not-for-profits Commission (ACNC), and replace it with a Centre of Excellence focused on education for not-for-profits, charitable bodies and for the community.

On 14 December 2013 the Assistant Treasurer announced the government's position in relation to the remaining 64 announced but unlegislated tax and superannuation reforms. Of the 64 measures that were subject to further consideration, the government has now announced that 16 measures will proceed and 48 measures will not proceed. Full details of the announcement are summarised in this Alert.

The Board of Taxation has released a Discussion Paper as part of its review and consultation on the arm’s length debt test (ALDT) in the thin capitalisation rules. The ALDT is one of three alternatives available to taxpayers to determine the maximum level of debt on which interest deductions may be claimed and is an alternative to the safe harbour threshold in the thin capitalisation rules.

A recent case has underlined the importance of a regular review of founding documents to ensure that those documents continue to meet your not for profit organisation's objectives and accurately reflect the activities that the organisation is carrying out.

While the majority of the Stronger Super reforms have now commenced, a number of changes are due to come into effect at the end of 2013. With this date now rapidly approaching, we wanted to provide you with the tools for a Stronger Super 'health check' to make ensure sure you are prepared to start the new year in strong form.

On 7 November 2013, the Australian Taxation Office issued Practice Statement Law Administration 2013/5, outlining its policy on the collection of group tax liabilities from head companies of consolidated groups, subsidiary members and entities that have left the consolidated group.

On 6 November 2013 the government announced its position on 92 previously announced but unlegislated tax and superannuation measures. The announcement provides a timetable and process to implement (or abandon) previously announced reforms and will provide greater certainty for the business sector on the fate of some important tax measures.

On Friday 18 October the Full Federal Court handed down the latest decision (MBI Properties Pty Limited v Commissioner of Taxation [2013] FCAFC 112) in the long running GST saga associated with the South Steyne Development at Manly Beach. In a surprise move, the court allowed the taxpayer's appeal by accepting that the application of the going concern concession to the sale of a leased residential building did not trigger a Division 135 adjustment for the purchaser.

The government has released a discussion paper concerning the employee share scheme administrative and tax arrangements for start-up companies. This is the first major tax policy announcement for the ESS since the 2009 reforms and reflects the government's commitment to growing a robust start-up sector through a review of the regulatory regime.

On 19 July 2013 the Organisation for Economic Cooperation and Development released its much anticipated Action Plan on Base Erosion and Profit Shifting. The BEPS Action Plan sets out the actions required to counteract the methods of base erosion and profit shifting used by multinational companies, initially identified in its February 2013 report Addressing Base Erosion and Profit Shifting.

The Australian Taxation Office has issued its annual compliance program, 'Compliance in focus 2013-14', setting out the areas it will focus on in its investigations and reviews throughout the coming year. The compliance program can help you determine the likelihood of being subject to scrutiny by the Australian Taxation Office.

The Australian Government has announced significant changes to Australia's thin capitalisation rules which will affect both inbound and outbound investment. Significant changes are also proposed to deny interest deductions for some outbound investment. These changes will significantly impact multinational entities in the banking, private equity, resources and infrastructure sectors, leaving them with little time to prepare.

Despite the recent political chaos and leadership crisis, the Australian Parliament has passed significant reforms to Australia's GAAR (Part IVA of the Income Tax Assessment Act 1936) on 25 June 2013 - Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013. We consider the GAAR amendments will have a material impact on how boards and their risk committees should best manage tax risk (especially the potential application of the anti-avoidance rules) for material transactions.

Employers should be aware that the due date for reporting employee share scheme interests is fast approaching. Where required by the tax laws, ESS Statements must be given to employees by 14 July and ESS Annual Reports must be given to the Australian Taxation Office by 14 August.

The announcement of the Australian Federal Budget on 14 May 2013 by the Treasurer, Wayne Swan did not contain any new changes to the taxation of superannuation, but did confirm a number of changes announced before the Budget (and in last year's Budget), ending pre-Budget speculation. There have been many recent announcements and reforms in this area. A 'state of play' summary has been prepared to provide a snap-shot of the current rules for taxing superannuation contributions.

In this Budget brief, we have discussed the government's Budget proposals as they impact on the mining, energy & resources industry and investors in that industry, and have included details of the Coalition's views (if any) on each proposal.

Although not involving stamp duty, the recent case of Resource Capital Fund III LP v Commissioner of Taxation [2013] FCA 363 is a good reminder that the proper valuation of land interests held by mining entities is an important exercise in correctly determining the amount of any landholder or land rich duty payable on acquisitions of interests in the entity. The case also provides some guidance regarding the proper valuation of mining information.

On 26 April 2013 Treasury released the Government response to the Parliamentary Joint Committee on Corporations and Financial Services report on the collapse of Trio Capital and to the Richard St. John report on Compensation arrangements for consumers of financial services. Although preliminary, the response gives a clear signal to industry regarding the shape of future developments in financial services regulation.

On 18 April 2013, Treasury issued exposure draft legislation, an explanatory memorandum and draft designation rules to provide a tax loss incentive for nationally significant designated infrastructure projects. To access the tax loss incentive the project vehicle must meet certain requirements to be a designated infrastructure project entity, and the project must be determined a designated infrastructure project by the Infrastructure Coordinator.

The proposed statutory codification of the definition of 'charity' and the inclusion of a statutory 'public benefit' test may impact professional organisations currently endorsed as charities. Clients within these entities should consider their current constitutional documents in light of the proposed changes.

On 8 April 2013, the federal government issued the Charities Bill 2013 and the Charities (Consequential Amendments and Transitional Provisions) Bill 2013, introducing a statutory definition of 'charity' and 'charitable purpose' for the purposes of all Commonwealth legislation.

A further tranche of tax legislation to exempt eligible foreign funds from Australian income tax has been released for public comment. This legislation (once enacted) will extend the Investment Manager Regime (IMR) exemption, to apply from 1 July 2011 (for the 2011- 2012 and later income years).

New regulations establishing governance standards for entities registered with the Australian Charities and Not-for-profits Commission (ACNC) have now been finalised (subject to parliamentary procedural requirements). Entities that are registered charities are automatically registered at the ACNC. Registered charities and not-for-profits (NFP) should now treat the regulations as having full effect.

The Australian Taxation Office has indicated it will withdraw its controversial draft taxation ruling for stapled groups - TR 2012/D5 'Income tax: debt and equity interests: when is a public unit trust in a stapled group a connected entity of a company for the purposes of paragraph 974-80(1)(b) of the Income Tax Assessment Act 1997'.

On 1 March 2012 the Government announced that it was considering amendments to counter perceived weaknesses with Part IVA of the Income Tax Assessment Act 1936 (Cth) (ITAA36), Australia's general anti-avoidance rules (GAAR). This followed high profile losses by the Australian Taxation Office in the Courts. On 16 November 2012, the detail of the proposed reform to the GAAR was announced. On Wednesday the Government introduced into parliament the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013 (Part IVA Bill) which follows the Exposure Draft released on 16 November last year.

On 17 December 2012 Treasury released a Consultation Paper on minimum governance standards for entities registered with the Australian Charities and Not-for-profits Commission (ACNC), as well as draft Regulations and an Explanatory Memorandum on financial reporting obligations and annual information statements for such entities. The ACNC is also going to be offering direct consultation at road show events to explain these proposals, and the timing and venue of those events will be outlined in due course on the ACNC website. Written submissions on both proposals must be made by 15 February 2013.

The charity and not-for-profit sector officially has a new regulator, as the Australian Charities and Not-for-profits Commission Act 2012 and the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Act 2012 both received Royal Assent on Monday 3 December 2012.

On Saturday 24 November, the highly anticipated Significant Investor visa opened for business. The Significant Investor visa is a new stream of the existing Subclass 188 (provisional) and Subclass 888 (permanent) business visas. It is available to individuals who are prepared to invest AUD5 million into 'complying investments' in Australia and is designed to encourage more genuine and higher quality investments into business and innovation in Australia.

On 16 November 2012 the Assistant Treasurer issued an Exposure Draft and Explanatory Memorandum proposing changes to Australia's general anti-avoidance rule (GAAR). In this alert we discuss the concerns that are being addressed by the proposed reform, outline the proposals made in the Exposure Draft and EM and their practical implications

The Not-for-profit Sector Tax Concession Working Group has released a discussion paper on tax concessions for the not-for-profit sector, 'Fairer, simpler and more effective tax concessions for the not-for-profit sector'. Its stated purpose is to stimulate debate and feedback on federal tax concessions available to not-for-profit entities, but it is not intended as a position paper and does not make any recommendations to government.

Legislation to establish the Australian Charities and Not-for-Profits Commission has today been passed by the Senate with 34 government amendments, which have now been referred back to the House of Representatives for concurrence.

The Inspector-General of Taxation (IGT), Mr Ali Noroozi, recently announced his new work program (for 2012/2013 and beyond) for improving tax administration in Australia. This follows an extensive community consultation process.

The Australian Taxation Office has issued its compliance program for 2012-13. The compliance program is produced annually and sets out the areas the Australian Taxation Office will focus on in the year ahead.

New tax rules for living away from home (LAFH) benefits, including living away from home allowances (LAFHA), received Royal Assent last week, and apply from Monday 1 October 2012. The Australian Taxation Office has released a draft Taxation Determination TD 2012/D8 which sets out how it will determine the 'reasonable' gross cost of food for employees on assignment and transitional rules for the FBT year ended 31 March 2013.

Based on the changes implemented on 1 March 2012, this discussion looks at the Part IVA scheme and potential tax benefit resulting from its creation, including an analysis of the so-called 'do nothing' alternative postulate.

On 16 July 2009, the Australian and New Zealand Governments entered into the Trans-Tasman Retirement Savings Portability Arrangement (Arrangement).

The Arrangement was stated as having the intention of enhancing a seamless trans-Tasman labour market by providing the ability for retirement savings to be transferred between an Australian complying superannuation fund and a New Zealand KiwiSaver scheme, with minimal compliance and administration costs. The Arrangement is subject to a number of restrictions, as outlined in the Arrangement document.

The Australian Taxation Office (ATO) has released two draft Tax Determinations relevant to the sale of assets in the course of a receivership. These express the view that receivers have an obligation to retain sufficient funds from the gross sales proceeds to pay tax 'which is or will become due' on such asset sales. This applies even if no tax assessment has yet been issued. This obligation is said to 'take precedence' over obligations to secured creditors.

The Assistant Treasurer has announced that because the legislation to establish the Australian Charities and Not-for-Profits Commission (ACNC) had not been passed in the house, and the Senate will not resume until 9 October, the start date of the ACNC will no longer be 1 October 2012

This morning, the Senate passed the Bill containing the proposed living-away-from-home (LAFH) tax changes without further amendment. It is expected the Bill will receive Royal Assent in coming days, so the new tax rules for LAFH concessions should apply on schedule, from 1 October 2012.

Last week's State Budget included the announcement of several duty and royalty changes. Also last week the Queensland Government passed the Fiscal Repair Amendment Act 2012 which will apply duty to direct and indirect transfers of interests in resource exploration tenements, increase the top marginal duty rate and expand the definition of 'land'.

On 27 August 2012, the Financial Services Council released its "Superannuation Governance Policy" (FSC Standard) which sets out proposed new binding requirements on FSC members that hold an RSE licence to operate public offer funds.

On 23 August 2012, the Government introduced into the House of Representatives the Australian Charities and Not-For-Profits Commission Bill 2012 to establish the Australian Charities and Not-For-Profits Commission (ACNC) as a regulator of charities registered with it from 1 October 2012. The ACNC's regulatory powers are expected to be expanded over time to regulate other not-for-profit entities.

To be entitled to income tax exemption (ITE) and deductible gift recipient (DGR) status, most entities (other than specifically endorsed DGRs and ITE entities prescribed as exempt under regulations) need to satisfy special 'in Australia' conditions - including having a physical presence, making governing decisions and expending certain funds in Australia, and being a not-for-profit entity.

The Australian Government recently released draft legislation which proposes to restrict the ability of taxpayers to claim refunds of overpaid GST. This will be particularly important for anyone considering undertaking a residential development or selling land under the margin scheme, as it will mean that any overpayment of GST as a result of incorrectly applying the margin scheme will potentially be lost forever (whereas under the current rules, the supplier at least has an opportunity to seek a refund of that overpaid GST).

You should be aware of the risk of incorrectly calculating the margin GST payable on each lot when involved in developments with a residential component. This alert explains the proposed changes.

On Wednesday 15 August 2012 the House of Representatives Standing Committee on Economics released a report on draft legislation to establish the Australian Charities and Not-for-Profits Commission (ACNC). The report recommends that the draft legislation be passed subject to a number of amendments being made. Therefore, at this stage, the ACNC is expected to commence operations on 1 October 2012.

The Government today released for public comment an exposure draft of the Personal Liability for Corporate Fault Reform Bill 2012 (Liability Reform Bill). This release is the third and final step in the Government's response to the Directors' Liability Reform Project, a Council of Australian Governments (COAG) initiative to harmonise the approach of all Australian jurisdictions to personal criminal liability for corporate fault. The COAG initiative included establishing a set of principles to apply across legislation when considering provisions which provide for personal liability for corporate fault.

A draft ruling issued by the Australian Taxation Office ('Income tax: debt and equity interests: when is a public unit trust in a stapled group a connected entity of a company for the purposes of paragraph 974-80(1)(b) of the Income Tax Assessment Act 1997) will significantly impact the tax consequences for past and present capital raisings for stapled groups

On 27 June 2012, the Australian Taxation Office released its final tax ruling, setting out the circumstances in which the ATO considers that a franked distribution may be made by a company. The position adopted is broadly consistent with its previous draft ruling, with additional clarification on the areas of uncertainty raised during the consultation process.

On 29 June 2012 legislation that amends the director penalty regime in the Taxation Administration Act 1953 (Cth) received royal assent. The amendments include extending the regime to cover the superannuation guarantee charge, changing the way the ATO can collect tax under the regime and changes to the available defences among others.

The new living away from home allowance (LAFHA) tax legislation was introduced into Parliament on 28 June 2012. While the legislation is generally consistent with previous announcements, there are several important changes that taxpayers need to be aware of.

Minter Ellison today announced that William (Bill) Thompson has been appointed the new Managing Partner of the firm's Brisbane office. He takes over from Ross Landsberg, who returns to full-time practice as a major projects and construction lawyer.

In this Australian Tax Brief we summarise the key aspects of the FIN48 and IMR exemptions, and analyse some of the core requirements – including what is an IMR foreign fund and what IMR income is not subject to Australian tax.

In recent years the Australian Taxation Office (ATO) has increased its level of audit and review activity. It has also introduced new tax risk reporting requirements. The ATO have for many years emphasised the role of the Board in managing tax risks. Now is an opportune time for your Board to review the existing corporate governance policies to ensure that the management of tax risk is effective. Our Tax Brief provides some guidance on what the ATO expect from the Board and what actions the Board can take to appropriately manage tax risks.

On 1 October 2012 the Australian Charities and Not-for-Profit Commission will assume responsibility for determining charitable status from the Australian Taxation Office. We summarise the key findings of the progress report issued by the ACNC Implementation Taskforce arising from the community consultations and public submissions.

In prior years trustees had until 31 August to complete distribution resolutions for the year ended 30 June. In the wake of recent court decisions the Australian Taxation Office (ATO) has scrapped this concession. This year resolutions must be completed by 30 June, which is less than 14 business days time!

A new Division 815 – Cross-border transfer pricing is to be inserted into the Income Tax Assessment Act 1997 (ITAA 1997). The new Division :

ensures that the treaty transfer pricing rules are able to be applied independently of existing 'domestic' transfer pricing rules and should provide a separate assessment authority. An express reference to the treaty transfer pricing rules is to be included in the ITAA 1997; and

requires the arm’s length principle to be interpreted as consistently as possible with relevant guidance issued by the Organisation for Economic Cooperation and Development (OECD) - by providing direct access to OECD guidance material when interpreting Australia's enacted transfer pricing rules; and

clarifies how the transfer pricing rules will interact with Australia's thin capitalisation rules.

The report by Mr Richard St John into compensation arrangements for consumers of financial services, released on 8 May 2012, has recommended the consideration of key reforms which could have a significant impact on the financial sector. We analyse the report and discuss its key recommendations and their implications for licensees, product issuers and consumers.

On 8 May, 2012 the Australian Federal Treasurer announced the Federal Budget for the year commencing 1 July 2012, including a number of tax changes to living away from home allowances, employment termination payments and the tax treatment of 'concessional' (deductible) superannuation contributions. This Tax Brief sets out a summary of the main tax changes for executives, expatriates and employers.

On 18 April the government released for public comment exposure draft legislation for the Tax Laws Amendment (2012 Measures No. 2) Bill 2012: Companies' non-compliance with PAYG withholding and superannuation guarantee obligations. The draft legislation proposes amendments to the current regime in the Taxation Administration Act 1953 (Cth) which imposes personal liability on directors for certain unpaid company tax in some circumstances. Those existing rules are known as the director penalty regime.

The Government has released for public comment exposure draft legislation, the Tax Laws Amendment (2012 Measures 3 No. 4) Bill 2012: tax exempt body "in Australia" requirements. Its purpose is to restate and standardise the special conditions for deductible gift recipient (DGR) entities in Division 30 of the Income Tax Assessment Act 1997 (ITAA 1997) andincome tax exempt (ITE) entities in Div 50 of the ITAA 1997. The proposed legislation also introduces a standardised definition of the term 'not-for-profit' that will apply for the purposes of all federal tax legislation and also for legislation being drafted regarding registration of entities as a charity with the Australian Charities and Not-for-profits Commission.

The Australian Taxation Office (ATO) has issued a draft ruling (Taxation Ruling 2012/D1) setting out its view on what is 'income of the trust estate' under Division 6 of Part III of the Income Tax Assessment Act 1936 (Cth) and related provisions. The ATO ruling suggests that 'notional income amounts' (such as franking credits, some TOFA gains and losses and attributed foreign income) are excluded in determining what is the income of the trust in any income year. This seemingly 'new requirement' creates more uncertainty than it resolves, in particular because it would require that any accretion or depletion of trust property (including unrealised amounts) should be characterised and attributed to either income or capital of the trust. Based on the ATO views, trustees may need to revisit their trust deed definition of 'income of the trust' and in particular how the deed deals with notional amounts of income and expense to ensure an appropriate allocation of the taxable income of the trust. The draft ruling, when finalised, will apply both before and after the date of issue (that is, in practice it will have retrospective operation). Submissions close on 11 May, 2012.

The government has announced that it will extend the start date for implementation of the tax reform measure Better Targeting for Not-For-Profit Tax Concessions to 1 July 2012. The legislation was originally intended to apply from 1 July 2011. The reason given for the extension is to satisfy concerns from the not-for-profit (NFP) sector about the need for further consultation.

On 29 March 2012 the High Court unanimously upheld the decision of the Commissioner of Taxation to disallow an application for endorsement of the 'Kalos Metron Charitable Trust' as a charitable trust fund. The decision provides High Court authority regarding the general duties of trustees for the proper administration of charitable trusts both under general law and for the purpose of meeting the special condition in section 50-60 of the ITAA 1997 for income tax exemption.

On 21 March 2012 Treasury issued final Regulations that will apply from 1 July 2012 to businesses in the building and construction industry. The Regulations listed as Taxation Administration Amendment Regulation 2012 (No 1) are applicable for the purposes of Division 405 of the Taxation Administration Act 1953 (Cth) and will require those businesses to report to the Australian Taxation Office payments made to all? contractors that provide building and construction services.

Proposed reforms to Division 269 of the Taxation Administration Act 1953 (Cth) (TAA) could extend the potential personal liability on directors to include a company's failure to pay the superannuation guarantee charge, and in some instances, to affect the ability for directors and/or their associates (such as family members) to claim tax credits under the PAYG rules where a company had failed to pay the relevant taxes.

The proposed reforms also involve the removal of the director penalty notice requirement for the Australian Taxation Office under Division 269, instead imposing an automatic director liability if the company had not paid the relevant tax within three months of its due date.

These reforms are still being considered by the government, and have been controversial – particularly the removal of the director penalty notice and the potential for tax impacts upon associates of directors.

Australia's carbon pricing mechanism which was introduced by the Clean Energy Legislative Package, will commence on 1 July 2012. Emissions units recognised under the Clean Energy Legislative Package will be considered as financial products under the Corporations Act from that date.

A second exposure draft of legislation to introduce an Investment Manager Regime (IMR) to Australia was released by the Minister for Financial Services and Superannuation, the Hon Bill Shorten MP on 7 March 2012. In this Australian Tax Brief we summarise the key objectives of the IMR and analyse some of the core requirements – including what is an IMR foreign fund and what IMR income is not subject to Australian tax.

The Australian Government has announced that it will defer the start date for the Australian Charities and Not-for-profits Commission (ACNC) to 1 October 2012. Originally, it was intended to be 1 July 2012.

The Parliamentary Joint Committee on Corporations and Financial Services (PJC) released its report on the Future of Financial Advice (FOFA) on 29 February 2012 confirming that the 'vast majority' of FOFA provisions should commence on 1 July 2012. The PJC does, however, embrace ASIC's proposal to adopt a facilitative approach to enforcement during the first 12 months, but only where breaches are inadvertent and the result of systems issues. It also embraced the view that ASIC adopt a facilitative approach to enforcement during the first 12 months, demonstrating a measure of accommodation to industry participants where breaches are inadvertent and the result of systems issues. We discuss the key PJC recommendations and summarise the Coalition recommendations in this Alert.

The Australian Government has released a consultation paper seeking public views on the proposal to introduce uniform national fundraising regulation. Under the proposed regime the regulated activity and regulated entity would be broadly defined, and specific exemptions would apply to limit fundraising regulation to those activities and entities that should be regulated for policy reasons. In this Alert, we discuss the key features of the national regulatory framework and other important issues tabled in the consultation paper.

Immediately prior to Christmas 2011, Treasury issued draft Regulations that are proposed to apply from 1 July 2012 to businesses in the building and construction industry. The draft Regulations are applicable for the purposes of Division 405 of the Taxation Administration Act 1953 (Cth) and will require those businesses to report to the Australian Taxation Office payments made to contractors that provide building and construction services. Submissions on the draft Regulations are due by 20 January 2012.

The Australian Taxation Office released on 21 December draft taxation ruling TR 2011/D8 which sets out the circumstances in which the ATO considers a distribution, made by a company in accordance with section 254T of the Corporations Act and the company's constitution, may be franked.

Minter Ellison has made a submission to Treasury on the Treasury Consultation Paper 'A Definition of Charity'. The submission includes some general comments on the proposed reforms and addresses a number of specific questions raised by Treasury in its consultation paper.

The Australian government has now announced (16 December 2011) the third and final element of an Australian investment manager regime (IMR). The IMR will include a tax exemption for widely held foreign funds making portfolio investments in Australian securities (including listed securities) and so will provide greater certainty for FIN 48 disclosure purposes. The government's proposed reforms will be backdated to 1 July 2011.

The government also expressed its support for most of the recommendations made by the Board of Taxation in its report Review of an Investment Manager Regime as it relates to foreign managed funds. We outline the recommendations and the other features of the proposed IMR regime in this alert.

The announcement means income, gains or losses, which have an Australian source, from portfolio interests or financial arrangements of a foreign managed fund, will be excluded from the calculation of the fund's taxable income (and that of its non-resident investors).

The Government has released for public comment exposure draft legislation, the Australian Charities and Not-for-Profits Commission Bill 2012, to establish the Australian Charities and Not-For-Profits Commission (ACNC) as a statutory authority to commence operations on 1 July 2012. The exposure draft legislation, explanatory memorandum and accompanying fact sheets can be found under the Not-for-profit Reform section. Comments on the exposure draft (ED) legislation are due on 20 January 2012.

The Federal Government has issued draft legislation changing the GST treatment of new residential premises constructed under development arrangements with government entities. On 23 November 2011, the Tax Laws Amendment (2011 Measure No.9) Bill 2011 was introduced as announced by the Assistant Treasurer earlier this year.

The Government has released a Consultation Paper seeking public views on the introduction of a standardised principle based governance framework for all not-for-profit (NFP) entities. The rules will overhaul existing governance rules for all NFP entities and will require a review of their existing constituent documents for compliance with the new rules. The rules will be administered by the Australian Charities and Not-for-Profits Commission (ACNC) when it commences operations on 1 July 2012.

Exposure draft legislation and explanatory material to rewrite and reform the rules on the buy-back of shares and non-share equity interests was released on 20 October 2011 for public comment. These reforms implement recommendations made by the Board of Taxation in its June 2008 report Review of the taxation treatment of off-market share buy-backs. We review the current rules and discuss the key changes proposed in the draft legislation.

On Tuesday, 29 November 2011, as part of its Mid-Year Economic and Fiscal Outlook 2011-12, the Federal Government announced a package of changes intended to raise A$11.5 billion in new revenue and savings.

The Australian Government announced in the 2010-11 Budget that it would phase down the rate of interest withholding tax (IWT) for financial institutions from 2013-14. This measure has now been deferred by one year to 2014-15 (saving the Budget A$70 million in each of 2013-14 and 2014-15).

The Australian Tax Office has issued a ruling regarding the acquisition of certain exchange traded commodity securities that are traded on the ASX. The ruling indicates that gains on disposal by the relevant investment trust will not be on capital account. On this basis, concessions that apply to capital gains would be denied.

The government has released a Consultation Paper on a proposed introduction of a statutory definition of 'charity'. The proposal will affect many not-for-profits and foundations that seek concessions (such as federal tax concessions), and forms a part of the wider regulatory reform of the not-for-profit sector signalled in the May Budget for the 2012 income year.

Two recent Federal Court decisions have significantly narrowed the ability of the Commissioner of Taxation to apply his discretion to withhold GST refunds. Accordingly, taxpayers who have outstanding GST refunds now have the opportunity to seek the release of these refunds in a timely fashion.

On 13 October 2011, The Australian Government tabled part of the first tranche of the Future of Financial Advice (FOFA) legislation in the House of Representatives. A number of changes have been made to the Exposure Draft which was released on 29 August 2011, including the removal of the best interests duty provisions. A further draft of these provisions is expected to be released for public consultation in the near future.

The Federal Government has recently announced proposed GST changes which will directly affect property developers. As part of its draft legislation, the Government proposes that developers' sales of new residential premises which are constructed under a development lease arrangement, will be treated as taxable supplies and not input taxed supplies. The ATO has also announced that it will release GST refunds to developers for GST overpaid in margin scheme transactions.

On Wednesday 28 September, the federal government released the second tranche of draft legislation (including an Explanatory Memorandum) designed to give effect to its Future of Financial Advice (FOFA) reforms. The draft Bill addresses conflicted remuneration (including product commissions, volume payments and 'soft dollar' payments). Surprisingly, long-awaited provisions dealing with the 'grandfathering' of existing commission arrangements have been left out of the draft legislation. In this Alert, we will briefly consider the main provisions of the draft Bill, and what their impact is likely to be. The deadline for submissions to Treasury on the draft Bill is 19 October 2011.

Yesterday, the Australian Government released its Stronger Super Information Package. The Assistant Treasurer, The Hon Bill Shorten MP stated that he expects the Stronger Super legislation to be released in tranches over the next 9 months, with consultation to be undertaken on each tranche. The first tranche dealing with MySuper is expected to be released within a month.

Every day the calls from business, industry and academia grow louder for the October Tax Summit to address the rate and base of GST. While the Treasurer has steadfastly refused to incorporate GST into the summit's terms of reference, it is increasingly obvious that any meaningful tax reform must involve consideration of the GST.

The Australian Government has released for consultation the Exposure Draft of the first tranche of the long-awaited Future of Financial Advice legislation. It covers the best interests duty, a new client priority duty, the opt-in requirements and enhancements to ASIC powers. There are also a few surprises — including the replacement of section 945A 'know your client' with some very prescriptive requirements for complying with the best interests duty. Submissions are due on 16 September 2011.

On 23 August 2011, the new Research and Development (R&D) Tax Credit law passed the Senate. This simplified tax credit scheme applies to activities and expenditure in income years commencing on or after 1 July 2011. The former R&D tax concession continues to apply to activities and expenditure conducted in prior income years.

Today, the Federal Government released for public comment the exposure draft of its proposed legislation for the carbon pricing mechanism (CPM). Submissions on the draft legislation are due by Monday, 22 August.

The tax rate has been reduced from 30% to 7.5% on distributions of certain income and gains from Australian 'managed investment trusts' (MITs) to residents of Singapore, the Cayman Islands, the Bahamas and five other jurisdictions. The reduced rate applies to 'fund payments' which commonly relate to a MIT's net rental income and capital gains on Australian real estate.

On 10 June 2011 the Australian Government released the Minerals Resource Rent Tax (MRRT) Bill 2011 as exposure draft legislation for public consultation and comment. The MRRT is to apply from 1 July 2012 to the mining of iron ore and coal in Australia.

On Friday 27 May 2011, the Government released a consultation paper seeking views on the implementation of the Government's Budget announcement to tax not-for-profit (NFP) entities on income derived from 'unrelated commercial activities'.

The 2012 Federal budget released on Tuesday night (10 May 2011) announced three key reforms for the NFP sector:

New laws will be drafted to take effect on 1 July 2011 to tax NFP entities on income derived from their 'commercial activities' that commence after 7:30pm (AEST) where the income is not directed back to the NFP's 'altruistic work'.

A new statutory authority, the Australian Charities and Not-for-profits Commission (ACNC), will be established to commence operations from 1 July 2012 to become a national regulator for the NFP sector.

Fom 1 July 2013 a legislative definition of 'charity' will take effect for the purposes of all Commonwealth laws and consultation will be undertaken with the States and Territories with a view to uniform adoption of the definition across all jurisdictions.

The reforms will impact upon all NFP sector entities, such as community service organisations, educational institutions, research institutions, philanthropic foundations, child care services, charities, social housing organisations, including NFP organisations that have been established by government.

The Federal Government announced on 24 March that it would accept all 98 recommendations made by the Policy Transition Group (PTG) which it set up to advise it in relation to the structure of the proposed Minerals Rent Resource Tax (MRRT) and expanded Petroleum Rent Resource Tax ( PRRT). The PTG made 94 recommendations about the MRRT and PRRT, and another four recommendations about the taxation treatment of mineral exploration generally.

The Australian Taxation Office (ATO) issued a Decision Impact Statement (DIS) on the decision of the Full Federal Court in Commissioner of Taxation v Secretary to the Department of Transport (Victoria) [2010] FCAFC 84 (DOT case), regarding government entities' entitlement to input tax credits under tripartite arrangements.

The Federal Government has released a second exposure draft of the foreign accumulation fund (FAF) rules.

These revised accruals taxation reforms will open up significant opportunities for offshore fund managers to offer their products directly to Australian investors, or through Australian feeder funds. The investments may be offered without the need for the fund manager to undertake bed and breakfasting arrangements, or to enter into complex derivative arrangements.

Australian managed investment trusts (MITs) (as defined for tax purposes) are eligible for the following important tax concessions:

MIT withholding – that is, a concessional rate of withholding tax applies to 'fund payments' made to foreign investors who are tax resident in a country that has an information exchange agreement with Australia [refer our previous Tax Brief on MIT withholding]; and

MIT capital account safe harbour - that is, the MIT may elect to apply the capital gains tax (CGT) provisions as the primary code for taxing gains and losses on the disposal of eligible assets (namely a share in a company, non-share equity, a unit in a unit trust, land - including an interest in land and a right to acquire or dispose of any of these assets) [refer our previous Tax Brief on MIT capital account safe harbour].

Non resident investors in Australian managed investment trusts (MITs) are subject to a final withholding tax on fund payments made by the MIT. Fund payments exclude payments of interest, dividends, royalties, capital gains and amounts not from an Australian source. These amounts are subject to separate tax rules and withholdings. Typically fund payments therefore include rental income and other Australian sourced income derived by the MIT.

The Australian Government is committed to developing Australia as a leading regional financial services centre. Tax uncertainties and the scope of the Australian tax system have been identified by the Australian Financial Centre Forum (the 'Forum') as a significant restraint on cross-border business – refer to Australia as a financial centre: Building on our strengths (the 'Johnson Report').

Eligible managed investment trusts (MITs) may elect to apply the capital gains tax (CGT) provisions as the primary code for taxing gains and losses on the disposal of eligible assets (namely a share in a company, non-share equity, a unit in a unit trust, land - including an interest in land and a right to acquire or dispose of any of these assets). The election must be made (in the approved form) during the first year that a trust qualifies as a MIT. Where an election is not made in that first year then a deemed revenue treatment applies to certain assets. Accordingly, it is critical to determine when the trust first qualifies as a MIT. The election once made is irrevocable. The Bill [Tax Laws Amendment (2010 Measures No.1) Bill 2010] was introduced to the Australian Parliament on 10 February 2010 and is expected to pass before 31 March 2010 (the close of the autumn sitting).

Foreign investors will no longer be entitled to claim a deduction for interest and other costs incurred against income arising from their investments in Australian Managed Investment Trusts (MITs), following the introduction of a final withholding tax regime for MITs.

Applying Part IVA to manage your tax needs

February 2007

This article takes an in depth look at Part IVA, with reference to supporting case law, and discusses the interpretation and potential issues affecting taxpayers.